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All About SIP
What are the benefits of SIP?
The benefits of SIP investment are several. A few of them are rupee cost averaging, disciplined investing, flexibility of investment &a; amount, long term wealth creation as a resultant of compounding effect.
How to start an SIP?
Starting an SIP is easy. First, you need to select a fund that is best suited to your long-term goals and risk profile. You can do this yourself, or you can take the help of a professional financial advisor. Once you have zeroed-in on a fund, you need to fill the SIP application form, post which a fixed amount is deducted from your bank account every month and directed towards the mutual fund you choose to invest in.
How much return can I expect on an SIP investment?
Unlike traditional fixed income products, Mutual Fund investments do not provide a guaranteed return. But, historically, over a long-term, investments in Equity Funds have generated better returns than traditional fixed-income products. Having said that, Mutual Fund investments are subject to market risks. You are advised to read all scheme related documents carefully before investing.
What are some of the best SIP plans?
There is no such thing as a “Best Mutual Fund.” It is a myth. Every fund has a unique investment objective that caters to the needs of different investors. You need to select the right fund basis your risk appetite and time-frame for achieving your life goals. You may decide to invest either via SIP or Lumpsum.
What is meant by “SIP frequency?”
SIP frequency refers to the pre-defined interval at which a fixed amount, mandated by you, is deducted from your bank account. You can go with a monthly, quarterly, semi-annual, or annual frequency.
Is there a minimum amount to start an SIP?
The minimum amount to start an SIP varies from fund-to-fund. Having said that, many funds in India now let you start an SIP at 100 rupees. Investing via SIP is not limited to small amounts. You can invest any amount you want. There is no upper limit on SIP. Minimum tenure of SIP is 6 months, whereas there is no maximum tenure.
What is the maximum amount I can invest through SIP?
Investing via SIP is not limited for any mutual fund scheme. You can start an SIP with any amount that you wish. There is no upper limit on SIP.
Can I have multiple SIPs?
Yes, you can start more than one SIP. There is no restriction on the number of SIPs you can have at a given point in time.
Does SIP offer the options of Growth and Dividend?
Yes, when you start an SIP, you can choose the option of either Growth or Dividend.
Can I switch between the options of Growth and Dividend at any point in time?
Yes, you can any time switch your SIP from Growth to Dividend and vice-versa, in an open-ended fund, without a lock-in period.
Is SIP available for all types of mutual funds?
Yes, you can start an SIP for any open-ended mutual fund.
What is meant by “Rupee Cost Averaging?”
One of the main benefits of SIP is Rupee Cost Averaging. It simply means that you get more units when the market goes down and less when the market goes up. Thus, you average out the cost of total units bought. This helps you to optimize returns over the long term.
Can I change the SIP amount at any time?
Yes, you can increase your SIP amount at any point. There are two ways to do that. You can either start a new SIP with the additional amount or you can opt for a facility, commonly known as SIP Booster or SIP Top-up, that lets you increase your SIP instalment amount at a pre-defined interval.
Can I stop my SIP at any time?
Yes, you can stop your SIP instalment at any point in time. There are no charges levied for stopping an SIP. Moreover, you can withdraw the corpus accumulated through previous instalments.
Can I switch my SIP investment from one fund to another?
No, you can switch your SIP from one fund to another. You will need to stop the current one and start a new one in your desired fund. But, the corpus accumulated through past instalments, in an open-ended fund without a lock-in period, can be switched to another fund.
Will I incur a penalty if my SIP installment fails to get through due to an insufficient account balance?
There is no penalty levied by Mutual Funds if your account balance is insufficient when the SIP instalment is due. It just that your instalment for that particular month will not be processed, but your SIP will continue normally next month onwards, provided the balance is sufficient.
Can I invest in ELSS using SIP?
Yes, it is possible to invest in an ELSS fund through SIP.
What is the ideal investment horizon for an SIP?
SIP is a good habit of saving & investing a fixed amount regularly with the objective of creating wealth over the long term. Hence, an SIP should be done for perpetuity, unless you are starting an SIP for a specific goal that is due on a particular date.
Which SIP frequency is better – weekly or monthly?
Assuming the same rate of return, a weekly frequency will turn out to be a better choice as you get the benefit of compounding. Unfortunately, the market returns are not predictable. Hence, there is no correct answer as to which frequency is better. That being said, it is advisable to select the frequency based on your cash flow. Hence, salaried individuals prefer a monthly frequency for their SIP.
Should I invest in SIP directly or through an advisor?
There more than 1000 open-ended mutual funds in India. Selecting the right fund is always an uphill task. It requires in-depth knowledge of markets and mutual funds. If you have the time and the required skills to analyse the funds for finding the one that suits your needs and risk appetite, you can go for Direct funds. Otherwise, it is advisable to go with the professional financial advisors who will recommend you the right fund that is best suited to your needs and life-goals.To start Investing journey Download Findola App
Is there any extra or hidden cost that I will incur for starting an SIP?
No, there is no extra charge or hidden cost for starting an SIP.
If the returns on my investment are negative, what should I do?
When facing negative returns, the most common mistake investors tend to do is to stop their SIP and withdraw the accumulated corpus. Ideally, if you have a long-term investment horizon, a market downturn should be treated as an opportunity to buy more to average out the cost of total units. This will help you to generate favorable returns when the market becomes positive.
What is meant by “SIP Booster” or “SIP Top-up?”
SIP Booster or SIP Top-up lets you increase the amount of your SIP installments at pre-defined intervals. This way, you don’t need to start a new SIP from time-to-time. The increase in the instalment amount can be a fixed sum of money or it can be a percentage of your current instalment value.
Which is better – Lumpsum or SIP?
The answer to this question depends on the stock market conditions. During upward trends, the lumpsum mode of mutual fund investment tends to give relatively higher returns whereas during falling markets, investments made via an SIP generally provides better returns than a lumpsum investment. Having said that, SIP promotes a habit of regular savings and investing, regardless of market conditions.
What are the types of SIPs available?
Below are the types of SIP available on findola App: 1. Perpetual SIP: Investors can choose a perpetual SIP with any Mutual Fund, which continues indefinitely until the investor decides to stop or modify it. 2. Top-up SIP: all Mutual Fund provides the option of a top-up SIP, allowing investors to increase their investment amount periodically by a fixed percentage or a fixed amount. 3. Smart SIP: In a Smart SIP, the SIP installment varies based on market valuations.
What is the Power of Compounding?
In compounding, interest is generated not only on the initial investment amount but also on the previously accumulated interest. In case of SIP, the regular re-investment of returns to generate compounding effects over time. Hence, it is advisable to start investing as early as possible to reap the maximum benefits of compounding.
What is the lock-in period for mutual funds?
Lock-in period in Mutual Funds refers to the period during which the investor is prohibited from redeeming the units of the fund, either partially or wholly. Usually, the lock-in period in case of the close-ended fund is 3 years. In India, most of the mutual funds do not have a lock-in period.
All About Tax Implication
Are mutual fund taxes payable every year?
If you opt for a mutual fund scheme, you need to pay the applicable taxes only when you redeem the units or sell the scheme. It does not count on every year. However, your total income for the financial year in question includes your dividend income from mutual fund schemes. So, you need to pay tax for this dividend income if your income is liable to income tax.
Can mutual fund investments help me get a rebate on income tax?
Under Section 80C of the Income Tax Act, tax benefits are applicable in the case of ELSS or Equity Linked Saving Schemes. You can get up to Rs.1.5 lakh in tax deduction and save around Rs.46,800 each year on taxes. One should remember that ELSS has a minimum lock-in period of three years.
Are wealth taxes applicable to MF investments?
According to the Wealth Tax Act, mutual funds and other financial assets are exempted from any wealth taxes. So, you need not to pay wealth tax upon investing in a mutual fund.
How are you taxed on mutual funds?
Mutual fund taxes typically include taxes on dividends and earnings while the investor owns the mutual fund shares, as well as capital gains taxes when the investor sells the mutual fund shares.
Is tax automatically deducted from mutual funds?
No. You are liable to pay taxes on mutual fund returns/ gains only when you sell your holdings. However, the dividend income is added to your total taxable income. Thus, you will have to pay tax on the dividend income every year as per your income tax slab.
How much equity mutual fund income is taxable?
Mutual Funds classified as equity funds have an equity exposure of at least 65%. As previously stated, when you redeem your equity fund units within a holding period of one year, you realize short-term capital gains.
Regardless of your income tax bracket, these gains are taxed at a flat rate of 15%. When you sell your equity fund units after holding them for at least a year, you realize long-term capital gains. These capital gains are tax-free, up to Rs 1 lakh per year.
Any long-term capital gains over this threshold are subject to a 10% LTCG tax, with no benefit of indexation.
What is the STT rate for equity mutual funds?
0.001%
Securities Transaction Tax (STT)
An STT of 0.001% is levied by the government (Ministry of Finance) when you decide to buy or sell mutual fund units of an equity fund or a hybrid equity-oriented fund. There is no STT on the sale of debt fund units.
How do I avoid tax on MF?
You make long-term capital gains on selling your equity fund units after holding them for over one year. These capital gains of up to Rs 1 lakh a year are tax-exempt. Any long-term capital gains exceeding this limit attracts LTCG tax at 10%, without indexation benefit.
How do I show SIP in income tax?
You can initiate an SIP into an ELSS, the most popular tax-saving investment under Section 80C of the Income Tax Act, 1961. Every SIP instalment into an SIP counts towards tax deductions under Section 80C. You can claim a tax rebate of up to Rs 1,50,000 and save up to Rs 46,800 a year in taxes.
How do I know if my mutual fund is under 80C?
An ELSS is a mutual fund class that offers tax deductions under Section 80C of the Income Tax Act, 1961. To check if a fund is an ELSS or not, you need to check for its details on the fund house’s website. If you are investing via a third party, the same information will also be available on their website.
What is the exit load in a mutual fund?
Exit load in mutual funds. Mutual Fund exit load is a fee charged by the mutual fund houses if investors exit a scheme partially or fully within a certain period from the date of investment, as specified in the Scheme Information Document.
Do all equity mutual funds come under 80C?
ELSS mutual funds are the only class of mutual funds that are covered under Section 80C of the Income Tax Act, 1961. By investing in an ELSS, you are entitled to claim a tax rebate of up to Rs 1,50,000 a year.
General Queries
What is a mutual fund in simple terms?
Mutual funds let you pool your money with other investors to “mutually” buy stocks, bonds, and other investments. They’re run by professional money managers who decide which securities to buy (stocks, bonds, etc.) and when to sell them.
Do mutual funds earn money?
Mutual funds primarily make money through sales charges that work like commissions and by charging investors a percentage of assets under management (AUM). The Securities and Exchange Commission (SEC) requires a fund company to disclose shareholder fees and operating expenses in its fund prospectus.
Can a mutual fund go to zero?
It is quite possible that your investments are giving negative returns. But it is highly unlikely for the value of a fund portfolio to become zero. While the return on your investment (ROI) can be negative, it is impossible for your investment to become zero.
Can I sell my mutual fund anytime?
You can enter an order to buy or sell mutual fund shares at any time, but your trade won’t be executed until the closing of the current trading session or the next trading session if you place your order after hours. The price you realize will be the NAV that is calculated after the market closes.
Is mutual fund better than FD?
While FDs are considered a safe and secure investment option, yielding low to moderate returns, mutual funds offer the potential for higher returns with greater risk. Mutual funds are professionally managed investment portfolios that pool money from multiple investors with similar financial goals.
What is the “15*15*15 Rule” in Mutual Funds?
Consider investing Rs 15,000 per month for 15 years and earning 15% returns. After 15 years, the total wealth will be Rs 1,00,27,601 (Rs. 1 crore)
What is NAV?
NAV stands for Net Asset Value. The performance of a mutual fund scheme is denoted by its NAV per unit. NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on a given date.
What is NFO?
NFO stands for New Fund Offer and refers to a term commonly used in the world of mutual funds and investments. It represents the launch of a new mutual fund scheme by an Asset Management Company (AMC) or fund house.
What is CAGR in mutual funds
Compound Annual Growth Rate or CAGR is the annual growth of your investments over a specific period of time. In other words, it is a measure of how much you have earned on your investments every year during a given interval.
What is the full form of AUM?
Assets under management (AUM) is the total market value of the investments managed by a person or entity on behalf of investors. AUM fluctuates to reflect the flow of money in and out of a fund and the price performance of the assets. A fund’s management fees and expenses are often calculated as a percentage of AUM.
What is better than CAGR?
XIRR is a better measure of returns from SIP than CAGR because it takes into account the timing of the investments.
What is AMC in mutual fund?
AMC full form is an Asset Management Company, which holds the responsibility for overseeing and managing various types of investment funds like mutual funds, and Exchange-Traded-Funds (ETFs), among many more.
What is liquid fund?
Liquid funds are debt funds that invest in debt and money market securities with maturities of up to 91 days. Liquid funds invest in short-term, good quality, and liquid securities; hence, the value of their units tends to be less volatile as compared to other debt funds.
What is STP in mutual funds?
Transfer Online. Systematic Transfer Plan (STP) is a strategy where an investor transfers a fixed amount of money from Source scheme to Target scheme (usually from a debt fund to an equity fund).
Why are mutual funds subject to market risk?
Mutual funds carry risk because they invest in various financial instruments such as stocks, corporate bonds, and government securities. These instruments’ prices are influenced by various circumstances, which might lead them to change and depreciate. Therefore, it is essential to ascertain the risk profile before investing in mutual funds.
Do mutual funds have a lock-in period or a maturity date?
Mutual funds, except Equity Linked Savings Schemes (ELSS) or tax-saving mutual funds, don’t have any lock-in period. This means an investor can invest and redeem their money per their requirement. However, it is essential to keep the tax implications and exit load in mind before making any redemptions.
ELSS funds have a three-year lock-in period, and investments made to these funds can help reduce taxable income under section 80C.
Investment Related
In which funds should beginners invest their money?
First-time investors should not start their investment journey with pure equity funds. However, those having taxable earnings should start with ELSS, which generally translate into superior performance. Other novice investors can invest in balanced advantage funds or aggressive hybrids.
What is the ideal number of mutual funds to hold? Also, for how long should investors invest in equity funds?
If chosen carefully, four to five funds can fulfil needs of most investors. This is across asset classes (equity & fixed) and different equity segments. The underlying portfolio should be diverse and reflective of different styles. Talking about equity funds, investors should invest for at least five years.
What if a fund is not performing well?
Two things that matter here are – since how long is the fund not performing well and what defines underperformance i.e. its inability to beat the index or peers? Give the fund a two-year time before deciding to exit.
Mutual fund or a basket of stocks, which one is better?
It is advisable to stick to tried and tested mutual funds over a basket investing. Further, in terms of taxation, mutual funds are more attractive and beneficial for investors.
While Small case does simplify stock investing at competitive costs, they are yet to prove themselves. However, investors tempted to invest in equities could allocate a small portion of their funds to small case portfolios.
Is a Mutual Fund with Lower NAV Better?
In mutual fund investments, many people believe in myths out of which one is that investing in a fund with lower NAV is better. We suggest you not to consider NAV when investing in any scheme. Suppose you have invested in a fund whose NAV is as low as Rs. 10, according to you it is better as it can reward you much higher returns than the scheme having higher NAV. What if the fund will not perform as per your requirements? It may be possible that the fund fails to provide any further growth, and showcase downfall. Therefore, it is suggested to not consider NAV, instead try observing the performance of the scheme before investing in it. In this way, you can understand the ability of the fund in generating high returns under various market situations.
What Are the Charges in Mutual Fund Investments?
If you think that the mutual funds will charge you at the time when you start investing, then you are absolutely wrong. They do not charge any such amount. You are really lucky that you are in the era of No Entry Load. It means mutual funds do not ask you for any fee when you start investing. However, they charge a little amount of money as Exit Load when you redeem your investments before the maturity period. This amount is charged as a fee to fund manager for handling the management of the scheme to reap maximum returns for you.
Is it a Right Time to Invest in Mutual Funds?
One of the most frequently asked questions by the herd of investors is when is the right time to invest in mutual fund. We have already provided suggestions on this topic, and again offering you as we are here because of you. First of all, both mutual fund investment and share market trading have completely different dimensions. You must be thinking that why we are talking about the share market, but yes the matter of timing the market only comes when you are trading in share market. In mutual funds, you need not time the market as the expert fund managers are there to handle all ups and downs in the performance of the scheme on the basis of the market trend. Therefore, forget thinking about the right time to invest in mutual funds; as here, the best time starts when you put your money in mutual fund investments to reap high growth.
What Are the Tax Benefits in MFs?
Some of the investors are still unaware of one of the excellent categories of the mutual fund which is Equity Linked Savings Scheme (ELSS). It is a tax saving category which allows the investors to reap the maximum tax benefits under section 80C of the Income Tax Act of India, 1961. There are many more tax benefits which can be availed by the investors that include no tax on long-term gain on the sale of equity mutual funds, benefits of indexation in case of debt mutual funds, tax-free dividend, etc. Although mutual funds allow the investors to avail several tax benefits, one must choose the one as per the suitability and the requirements.
Disclaimers:
An investor education initiative By Findola Wealth Research Team.
This article is generated and published by Findola Wealth Research Team.
Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.
SIP Related
What SIP means?
Systematic Investment Plans or SIPs are one of the most popular ways of investing in Mutual Funds. SIPs help inculcate financial discipline and build wealth for the future. With SIPs, you can start small and gradually build a corpus in a systematic and planned manner.
Does the SIP date has anything to do with performance? Which date is most suitable for SIPs?
The SIP date doesn’t matter and investors can choose any convenient date.
How to start an SIP?
Starting an SIP is easy. First, you need to select a fund that is best suited to your long-term goals and risk profile. You can do this yourself, or you can take the help of a professional financial advisor. Once you have zeroed-in on a fund, you need to fill the SIP application form, post which a fixed amount is deducted from your bank account every month and directed towards the mutual fund you choose to invest in.
What are the benefits of SIP?
The benefits of SIP investment are several. A few of them are rupee cost averaging, disciplined investing, flexibility of investment &a; amount, long term wealth creation as a resultant of compounding effect.
Why is SIP rejected?
Consequences of missed SIP installments
However, banks may charge a fee for Electronic Clearing Service (ECS) rejection if the investor fails to maintain sufficient funds. It’s crucial to know that if you miss three consecutive installments, the SIP is cancelled.
How much return can I expect on an SIP investment?
Unlike traditional fixed income products, Mutual Fund investments do not provide a guaranteed return. But, historically, over a long-term, investments in Equity Funds have generated better returns than traditional fixed-income products. Having said that, Mutual Fund investments are subject to market risks. You are advised to read all scheme related documents carefully before investing.
What are some of the best SIP plans?
There is no such thing as a “Best Mutual Fund.” It is a myth. Every fund has a unique investment objective that caters to the needs of different investors. You need to select the right fund basis your risk appetite and time-frame for achieving your life goals. You may decide to invest either via SIP or Lumpsum.
How to start an SIP?
Starting an SIP is easy. First, you need to select a fund that is best suited to your long-term goals and risk profile. You can do this yourself, or you can take the help of a professional financial advisor. Once you have zeroed-in on a fund, you need to fill the SIP application form, post which a fixed amount is deducted from your bank account every month and directed towards the mutual fund you choose to invest in.
Can SIP give negative returns?
You can incur losses even if you are investing through SIP. Your returns from the fund will always depend on the performance of scheme in which you have invested.
What is meant by “SIP frequency?”
SIP frequency refers to the pre-defined interval at which a fixed amount, mandated by you, is deducted from your bank account. You can go with a monthly, quarterly, semi-annual, or annual frequency.
What are the dark side of SIP?
There are very few negative of SIP which are ignorable: Date of investment is fixed and you cannot even manipulate it by one or two days. Your average entry date is delayed. Each installment of sip have different entry price, so calculating return is tough
Can I withdraw my SIP anytime?
Yes, you can withdraw money from your SIP anytime. However, there are a few exceptions. For instance, ELSS has a lock-in period of three years, while a children’s savings fund exhibits a lock-in period of 5 years.
What are the benefits of SIP?
The benefits of SIP investment are several. A few of them are rupee cost averaging, disciplined investing, flexibility of investment &a; amount, long term wealth creation as a resultant of compounding effect.
Can I have multiple SIPs?
Yes, you can start more than one SIP. There is no restriction on the number of SIPs you can have at a given point in time.
What are the benefits of SIP?
The benefits of SIP investment are several. A few of them are rupee cost averaging, disciplined investing, flexibility of investment &a; amount, long term wealth creation as a resultant of compounding effect.
How to start an SIP?
Starting an SIP is easy. First, you need to select a fund that is best suited to your long-term goals and risk profile. You can do this yourself, or you can take the help of a professional financial advisor. Once you have zeroed-in on a fund, you need to fill the SIP application form, post which a fixed amount is deducted from your bank account every month and directed towards the mutual fund you choose to invest in.
How much return can I expect on an SIP investment?
Unlike traditional fixed income products, Mutual Fund investments do not provide a guaranteed return. But, historically, over a long-term, investments in Equity Funds have generated better returns than traditional fixed-income products. Having said that, Mutual Fund investments are subject to market risks. You are advised to read all scheme related documents carefully before investing.
What are some of the best SIP plans?
There is no such thing as a “Best Mutual Fund.” It is a myth. Every fund has a unique investment objective that caters to the needs of different investors. You need to select the right fund basis your risk appetite and time-frame for achieving your life goals. You may decide to invest either via SIP or Lumpsum.
What is meant by “SIP frequency?”
SIP frequency refers to the pre-defined interval at which a fixed amount, mandated by you, is deducted from your bank account. You can go with a monthly, quarterly, semi-annual, or annual frequency.
Is there a minimum amount to start an SIP?
The minimum amount to start an SIP varies from fund-to-fund. Having said that, many funds in India now let you start an SIP at 100 rupees. Investing via SIP is not limited to small amounts. You can invest any amount you want. There is no upper limit on SIP. Minimum tenure of SIP is 6 months, whereas there is no maximum tenure.
What is the maximum amount I can invest through SIP?
Investing via SIP is not limited for any mutual fund scheme. You can start an SIP with any amount that you wish. There is no upper limit on SIP.
Can I have multiple SIPs?
Yes, you can start more than one SIP. There is no restriction on the number of SIPs you can have at a given point in time.
Does SIP offer the options of Growth and Dividend?
Yes, when you start an SIP, you can choose the option of either Growth or Dividend.
Can I switch between the options of Growth and Dividend at any point in time?
Yes, you can any time switch your SIP from Growth to Dividend and vice-versa, in an open-ended fund, without a lock-in period.
Is SIP available for all types of mutual funds?
Yes, you can start an SIP for any open-ended mutual fund.
What is meant by “Rupee Cost Averaging?”
One of the main benefits of SIP is Rupee Cost Averaging. It simply means that you get more units when the market goes down and less when the market goes up. Thus, you average out the cost of total units bought. This helps you to optimize returns over the long term.
Can I change the SIP amount at any time?
Yes, you can increase your SIP amount at any point. There are two ways to do that. You can either start a new SIP with the additional amount or you can opt for a facility, commonly known as SIP Booster or SIP Top-up, that lets you increase your SIP instalment amount at a pre-defined interval.
Can I stop my SIP at any time?
Yes, you can stop your SIP instalment at any point in time. There are no charges levied for stopping an SIP. Moreover, you can withdraw the corpus accumulated through previous instalments.
Can I switch my SIP investment from one fund to another?
No, you can&s;t switch your SIP from one fund to another. You will need to stop the current one and start a new one in your desired fund. But, the corpus accumulated through past instalments, in an open-ended fund without a lock-in period, can be switched to another fund.
Will I incur a penalty if my SIP installment fails to get through due to an insufficient account balance?
There is no penalty levied by Mutual Funds if your account balance is insufficient when the SIP instalment is due. It&s;s just that your instalment for that particular month will not be processed, but your SIP will continue normally next month onwards, provided the balance is sufficient.
Can I invest in ELSS using SIP?
Yes, it is possible to invest in an ELSS fund through SIP.
What is the ideal investment horizon for an SIP?
SIP is a good habit of saving &a; investing a fixed amount regularly with the objective of creating wealth over the long term. Hence, an SIP should be done for perpetuity, unless you are starting an SIP for a specific goal that is due on a particular date.
Which SIP frequency is better – weekly or monthly?
Assuming the same rate of return, a weekly frequency will turn out to be a better choice as you get the benefit of compounding. Unfortunately, the market returns are not predictable. Hence, there is no correct answer as to which frequency is better. That being said, it is advisable to select the frequency based on your cash flow. Hence, salaried individuals prefer a monthly frequency for their SIP.
Should I invest in SIP directly or through an advisor?
There more than 1000 open-ended mutual funds in India. Selecting the right fund is always an uphill task. It requires in-depth knowledge of markets and mutual funds. If you have the time and the required skills to analyse the funds for finding the one that suits your needs and risk appetite, you can go for Direct funds. Otherwise, it is advisable to go with the professional financial advisors who will recommend you the right fund that is best suited to your needs and life-goals.
Is there any extra or hidden cost that I will incur for starting an SIP?
No, there is no extra charge or hidden cost for starting an SIP.
If the returns on my investment are negative, what should I do?
When facing negative returns, the most common mistake investors tend to do is to stop their SIP and withdraw the accumulated corpus. Ideally, if you have a long-term investment horizon, a market downturn should be treated as an opportunity to buy more to average out the cost of total units. This will help you to generate favorable returns when the market becomes positive.
What is meant by “SIP Booster” or “SIP Top-up?”
SIP Booster or SIP Top-up lets you increase the amount of your SIP installments at pre-defined intervals. This way, you don&s;t need to start a new SIP from time-to-time. The increase in the instalment amount can be a fixed sum of money or it can be a percentage of your current instalment value.
Which is better – Lumpsum or SIP?
The answer to this question depends on the stock market conditions. During upward trends, the lumpsum mode of mutual fund investment tends to give relatively higher returns whereas during falling markets, investments made via an SIP generally provides better returns than a lumpsum investment. Having said that, SIP promotes a habit of regular savings and investing, regardless of market conditions.
What are the types of SIPs available?
Below are the types of SIP available on Kotak mutual fund website: 1. Perpetual SIP: Investors can choose a perpetual SIP with Kotak Mutual Fund, which continues indefinitely until the investor decides to stop or modify it. 2. Top-up SIP: Kotak Mutual Fund provides the option of a top-up SIP, allowing investors to increase their investment amount periodically by a fixed percentage or a fixed amount. 3. Smart SIP: In a Smart SIP, the SIP installment varies based on market valuations.
What is the Power of Compounding?
In compounding, interest is generated not only on the initial investment amount but also on the previously accumulated interest. In case of SIP, the regular re-investment of returns to generate compounding effects over time. Hence, it is advisable to start investing as early as possible to reap the maximum benefits of compounding.
Disclaimers:
An investor education initiative By Findola Wealth Research Team.
This article is generated and published by Findola Wealth Research Team.
Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.
